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What Types of Funding are Available for Restaurant Owners

Since the mass introduction to the World Wide Web in the mid-1990s, there are multiple options for everything. As a restaurant owner, you are most likely aware of at least five competitors within a small radius of your business. The restaurant business is very competitive and funding can be scarce even in the best economic times. There are several options available.

1. Traditional

2. Unsecure

3. Government

4. Personal

Traditional loans

Traditional restaurant loans are the most sought after. They have a long list of requirements , including a detailed and specific business plan and offering collateral such as homes and assets like vehicles  to secure the funding.  These loans for such necessities as restaurant equipment loans can be a mix between business and private life.  They can also require a hefty down payment, a history of restaurant experience, and a near impossible perfect credit score. Many banks require substantial amounts of collateral such as a mortgage. However, they can offer the lowest interest rates and they assume most of the risk. They are still the most desired option, though usually the most unattainable.

Unsecure

An unsecure loan can utilize different financial options. These can range from personal credit scores to corporate bonds. There is also more risk for the lender and a hallmark of this is higher interest rates. It may be best to apply for multiple loans from various lenders to procure the best interest rate and repayment terms. A longer-term loan is more desirable, as the lender will be able to recoup any losses over the lifetime of the loan. It may be preferable to start off with an unsecured business loan. This way a car or home can stay put and a budding entrepreneur can have a shot at their dream. After your first business is successful, it will be much easier to apply for a traditional loan.

Government

A pleasant surprise is that the Small Business Administration can offer lending solutions. The SBA cannot specifically grant a restaurant equipment loan request, but may direct you to private agencies within their umbrella. An SBA restaurant loan can be up to $150,000 with a possible three business day turnaround. These loans do not require as much capital or collateral as conventional loans, or a proven track record. The SBA assumes the risk and guarantees that the loan will be paid back, hence making your business attractive to lenders.  The vast majority who receive help from the SBA are minorities and women.

Personal

Many family members could be willing to give you a hand with restaurant financing if requested. With so many financing options, you do not need to have a family member volunteer their philanthropy by lending your business the money.

With each type of funding available, it would behoove you to research to the best of your ability. See what makes sense if you are a startup or have a strong record in the restaurant business. It might make more sense for startups to apply for unsecured restaurant financing.

Should I Hire a Food Photographer for My Restaurant?

Ask yourself how many of your patrons volunteer to take pictures of your restaurant’s dishes. It might be a safe bet given the prevalence of food porn in social media that at least 25% of your patrons engage in this tedious, yet widespread behavior as gifts to their social media followers. These amateurs may apply filters and witty (at least to them) captions about your food. You have no control over how your food is styled and the public’s perception of your offerings is based on a few hurried shots. Now what if you could control how your food was styled and how the public perceived your offerings? You may consider using a professional food photographer to handle your food’s image. (If you feel uncertain about your offerings consider a restaurant equipment loan to add new elements to your kitchen which may in turn create a great series of shots in your restaurant’s online image portfolio.)

  1. Ask for references
  2. Consider experience over price
  3. Maximize your brand

This may sound funny at first read because your food does not need to be styled or send a message. You may be correct on this, but your restaurant is all about the food and not your perceptions. To many patrons, perception is reality and with Millennials becoming increasingly visual rather than verbal, images may be the new word of mouth marketing for this technological era.

References

If you Google ‘food photography’ and your city, dozens of names will pop up. The answer to whether you should hire a professional food photographer is a resounding yes. Ask for references from your culinary peers. Research names and ask for portfolios. If a photographer has not worked with food, but would like to try it out, this may be a red flag.

Experience

Many photographers are eager to book whatever shoot they can get. Some might even try to sell you on their food photography expertise even though they may not have so much as styled a ladle. Choose your person carefully. Experience counts for quite a bit and a seasoned food photographer will not get ruffled if there is a snafu with an uncooperative floret. Consider when you were looking for restaurant financing. You did not want to take out a restaurant loan from a company with an unproven track record or credentials.

If you are concerned about price, think of how expensive it would be to reshoot or reschedule because an inexperienced photographer did not show up. A record of accomplishment or excellence is worth a few more dollars every time. Also consider additional restaurant financing with some extra money going to increasing your marketing budget.

Brand

Your brand is everything in the market. People patronize your establishment for its offerings and your reputation. If you doubt the power of word of mouth, just read negative Yelp.com reviews. Genuine reviewers and internet trolls can damage a brand with a few negative or even untrue words. Now consider how negative reviews impact restaurants. Your brand matters, so maximize your potential in the best way possible by hiring a food photographer. Lenders do consider your online presence when considering your application for a restaurant loan. Use every bit of publicity to your advantage.

Many businesses are required to have a website at this point in our evolution. The content typically includes the menu, location, and hours, but what engages potential customers are the images of the food. Research the most upscale restaurants in your city and the majority will have mouthwatering and appealing images of their selections for the cyber world to see. They have paid quite a bit for this service as perception can be reality in the culinary world.

A qualified food photographer can be considered a marketing tool. While they may not get as much use as your oven or grill, they are a valuable component, and you do not need to take out a restaurant equipment loan to hire one.  Every aspect of your brand counts and a food photographer might be the best way to get the visual word out there to potential patrons. Pictures are the new currency in this digital age and rather than fight it, it is more lucrative to join in with the masses.

How to Get Approved for a Restaurant Bank Loan

The economic downturn of 2008 meant less loans received approval. This frustrated many restaurateurs and set the standards of approval much higher than in 2007. Of course, most ways to obtain restaurant loans, restaurant financing and restaurant equipment loans are still the same. Try to have stellar credit and no previous bankruptcies. With the wealth of quality startups, there are some lenders who specialize in startup restaurant loans. However, at this stage, it may be more on the strength of your personal credit than your ideas when it comes to securing restaurant financing.

  1. Have a mortgage
  2. Include all assets such as cash, property, shares, bonds, and vehicles
  3. Demonstrate a consistent work record
  4. Make your financial strategy clear

Have a mortgage

Most lending is already risky business. Many apply for restaurant financing and are turned down. Lenders want to see that you are reliable with paying back restaurant loans. A homeowner can volunteer to borrow against personal collateral, but most restaurateurs will not put up their homes if they are not certain of their idea. Secretly, it has not much to do with certainty and more to do with how willing someone is to work. Homeowners are less willing to default and are therefore considered safer.

Include all assets

Assets such as cash, property, shares, bonds, and vehicles demonstrate your security. These can be great options if you do not have a home, as lenders are risk averse when approving restaurant loans. This may be a solid option if there is more than one person applying and not all are business owners. Make sure to include what can help you, rather than offering what might be insecure, such as internet stock.

Demonstrate a consistent work record

Starting a business will significantly decrease your earning potential. This is because a business is all-consuming and it can take up to three years to see a profit. Having a consistent work record signifies that you are less risky, as you have demonstrated a strong work ethic.  You would prefer to hire wait staff with a solid work background and the same applies here. If you have been working in another business, but have felt your calling is in the restaurant industry, this may be challenging. The restaurant world has a high rate of defaulting. It is a risk to gamble on someone who does not know the business. Try to take courses and the like to prove knowledge.

Make your financial strategy clear

When you are applying for a restaurant equipment loan, chances it will be easier attained than restaurant loans because when a loan defaults, the bank sees what it can take to make money off of to offset costs. This can include items such as the equipment. Banks want to see that your exit strategy has been carefully thought out before they can label you reliable.  Restaurant financing should focus on inventory and equipment. Lenders can retrieve inventory.

Pros and Cons of a Seasonal Menu

The change of seasons can be a gift to the culinary world as it offers an ever changing wealth of fresh ingredients. Many environmental experts have been picked a bone with the food industry as of late due to large carbon footprints from using hothouse produce and the transportation it needs. Restaurateurs, in an effort of consciousness or good publicity, are using more local and seasonal food to meet the green demands of society. There are pros and cons to changing the menu every season. It is always easier to offer the same items, but if you live in a geographical region where it is always summer or winter, this may not be a viable option. If you are resistant to trying a full-on seasonal menu, try out a mini seasonal menu with limited selections to test the waters with your patrons.  Also, make certain you have all the necessary equipment year-round to create the food for all seasons. If not, consider a restaurant equipment loan.

 

Pros

  1. Engage your customers
  2. Experiment with new recipes
  3. Keep up with trends

Cons

  1. Too much change can be overwhelming
  2. Inventory can become an issue
  3. Prevent familiarity

Engagement

Your customers always have an opinion-this is what can make them allies or frenemies. Seasonal change can lead to more engagement as you and the wait staff ask how they like the dishes. Some may volunteer stories about how their grandmothers may have made apple pie to kick off winter or spring. Many food bloggers are on the hunt for new topics and your seasonal menu can be featured, provided they have a connection to your establishment or culinary angle. Although it may not seem important, restaurant financing may be easier obtain with glowing reviews and a consistent online presence that engages local foodies.

Experiment

Your chefs should be as well rounded as possible. Seasons give them a chance to experiment with new ingredients and using food as fresh that’s as possible can be a great selling point. When applying for a restaurant loan, lenders always look at the menu. This can be a way of selling your restaurant as an innovative culinary experience with seasonal foods. Your chefs can also be a selling point, provided they can diversify their offerings. Experimenting with recipes can also gauge whether or not your restaurant needs new appliances or even a restaurant equipment loan to meet the expectations of the chef and patrons.

Trends

Fashion changes every season and some in the food industry believe seasonality is part of the culture. Millennials are prone to only following trends and your restaurant could become a mainstay on their radar. Many consider themselves foodies and following trends gives them conversation pieces.  Word of mouth is the best form of advertising and your seasonal menu can stay in the loop throughout the year. Also keep in mind that restaurant loans can be used for marketing purposes and engaging the same trendy audience.

Cons

Overwhelming

Too much change can become tedious after a while. Your wait staff will have to be acquainted with four different menus throughout the year, leading to confusion and annoyed patrons. Chefs can be temperamental and any change can annoy them. Too much change can lead to both confusion and frustration in your staff. If the staff is not in flow, the patrons take note.

Inventory

Depending on seasonality can lead to issues with inventory. If there is a poor harvest in the seasonal produce, there may be a pinch in the offered ingredients. In business plans used when applying for restaurant financing, the high rate of change in the inventory can be a cause of concern. Some lenders may prefer a stable menu.

No familiarity

For all the changes and trends in the fashion industry, most women have a staple little black dress. People are creatures of comfort, preferring familiarity to experimentation. If you serve a spectacular squash soufflé only in the winter, a craving for it can be frustrating if it is not on the current menu. The best way to circumnavigate this is to standardize all seasonal menus.

5 Reasons a Business Loan Makes Sense Even if Your Company is Profitable

Debt is a four letter word to some in the business world. Numerous entrepreneurs such as Mark Cuban believe that there is no need to start a business with a loan or with a great amount of capital. However, some business owners must accrue debt to even open their doors! The differing opinions could cause many to fear debt.  However, debt can benefit your business even if you are in the black.

  1. Not exchanging capital for equity

However tempting it is when capital is low to consider bringing in investors, relinquishing control that made your business successful may not be the best strategy. Many investors would want a say in the operations possibly leading to tension, which could then circle back around as an effort to try to buy out your business partners. Loans would increase your capital without taking on new governing members. Keep the profits in your pocket with some financial options from a reputable lender.

2.ROI is higher than the debt

They say in business that you should take any job that comes your way in the beginning, but most of us appreciate bigger projects with the potential for a solid profit. If you own a catering company that has been handling small affairs such as bat mitzvahs or school dances, the chance at weddings could put your operations into the black. However, if you have been used to smaller venues then the opportunity could be missed as a result of lacking the proper equipment. With a loan, the equipment could be delivered and new growth could be accelerated as a result. This scenario could apply to any number of businesses, from crafters to bulldozers.

3. Expecting the unexpected

What if your business is discovered, such as the company that designed what they bragged to be the best hoodie in the world? The demand soared, but, unfortunately, the inventory was low. As a result, there was a six month waiting list which could have soured their financial future had the company not been able to act quickly and amp up their manufacturing capabilities.

The risk was not only being able to keep inventory, but also prevent a knockoff from reaching the market and diluting their demand. Loans enabled the company to stay afloat and incorporate more factories to operate at maximum capacity. In business, miracles like this can happen, even though, no one can truly expect the unexpected enough to plan for the arrival. Loans can help keep up with unexpected demands.

4. Seasons change

Some products are seasonal, such as Christmas decorations or artisan chocolates. There may be a spike during the busy seasons, but when demand is slow there needs to be a financial cushion. This cycle is expected and part of the business, but can be pushed to the side when businesses such as hotels in the summer forget the darkness of winter. Each season is unique in its demands and offerings. One year in tourist-centered businesses, customers could demand low carb options for their brunch, while the next year demand could be centered on making everything gluten free. A loan could cushion the months when cash flow is slow with the ability to pay back in installments throughout the year leaving a business owner able to focus on profits.

5. Allow cash to flow

Most of us already have debt from mortgages, college tuition, and credit cards. If we paid for everything without debt, our cash reserves would quickly be tapped. Loans allow cash to flow throughout the avenues of your business without hindrance. Entrepreneurs cannot always afford to purchase big ticket items such as new equipment upfront or in cash. While not all debt makes sense, some debt allows businesses to accelerate growth while being liquid.

Would a working capital loan help your business run more smoothly and enable your business’ growth to accelerate? We can help you get approved in just 7 to 10 business days! To schedule an appointment to talk to one of our loan representatives click here! Or, learn more about the approval and payback process for our loans visit https://www.facebook.com/ARFFinancial for more information today.

A working capital loan is ideal for all businesses that want to take advantage of new growth opportunities and keep customers returning even with price changes.

• Less than perfect credit is not a problem

• Collateral is not required on amounts up to $725,000

• Flexible terms up to 18 months

• Approvals granted in 7 to 10 business days

• Fixed payments and interest rate

• Interest is tax deductible

• Not linked to credit card sales

Learn more about our business loan approval and payback process today to improve your restaurant and keep customers coming back for years to come.

On Point Trends

Fashion is notoriously fickle. Every season has a new look and featured designer. Trends have to wait quite a while, even decades, to return to the forefront of fashionistas’ consciousness. The worst insult in the fashion world is to deem a person off-season and stuck in a decade. Luckily for those in the shoe business, with every season comes the opportunity to satisfy client demands, build relationships and initiate new growth opportunities by generating leads. The power to grow your business depends on how fashionable your product is perceived by consumers. Keeping up with the well-dressed crowd is challenging enough; if companies are on top of trends,  clients will seek their products without second guessing the choices available.  However, a company must take great pains to stay au courant with the fashion world. As Fashion Week came to an end recently, many new trends emerged.

Styles

A woman always leaves shoes until last while getting dressed. Shoes are the final accessory and they always make a declaration, no matter what the decade is. Once upon a time in the fashion world, red shoes were statement pieces. Now the fashion world has thankfully branched out to other trends. The new “it” shoe for the season is pointed flats. Ballet flats have dominated the market for over five years now and it is definitely time for a change.

Pointed toe flats are dressier than their rounded counterparts are and lend an element of danger to the designs. Audrey Hepburn championed this look in the 50s and 60s rounded looks were favored in the 70s, but the shoes of the 1980s celebrated all angular looks. The time for the structure/look of angular shoes to return is Spring 2015.

Adornments and materials

Designers this year are also focusing on shoe adornments and accessories. A Mary  Jane strap with pointed flats will update a look to high market rather than down market. Studs are always in fashion, especially with the sleeker silhouettes of this year. However, the shoes of the 1970s should not be discounted. Clogs are making a comeback with materials that are more stylish and streamlined. Wedge sneakers are now the look of last year as the fashion forecast calls for more feminine wedges. The trending silhouette has gone back to sleek. Gone are the days of big buckles and bows. Fringe, however, is back in a big way as are the eternal preppy staple of loafers with updated accessories such as straps.

Do I have to follow trends?

One thing about the fashion world is that it is not taken seriously by everyone. Some people are quite happy still wearing Doc Martens or strappy sandals. These customers cannot be ignored in favor over trendier customers. Ask yourself in every step of the manufacturing process whether the product will appeal to your client base. This entails being aware of whom your buyers are. If your products are beloved by teenage girls, then trends are their focal point. However, if their mothers are your biggest engagers, then perhaps have standard pieces such as loafers with one or two trends mentioned above.

For example, Chanel has introduced pointed toe loafers with a Mary Jane strap. You can use this design as a template, but offer a selection of materials such as leather, pleather or even canvas. Color, in many cases, is just as important as the design. The “it” color of 2015 is Marsala, which is a rich wine color. While it may be tempting to manufacture all products in this color, please keep in mind that black is the eternal fashion staple color.

Trends are the lifeblood of the fashion world, but your buyers are yours. Customize trends to fit their needs. Ask yourself the following questions when deciding how to incorporate trends into your upcoming lines:

  1. What is the age range of my buyers?
  2. What are their needs?
  3. How important are trends to their look?
  4. How can I meet their expectations within my price point?

Keeping these questions in mind are key to surviving the fickle fashion world. After you have created your potential products and incorporated the trends, consider which company you will use to make your fashion vision a reality. There are many offshore manufacturing sites in the business. Select a reputable company if you do outsource, and do diligent research. High quality companies include EDS Footwear, Deerway CO Ltd and Chengdu Mokai. Also, subscribe to different fashion bibles such as Vogue and Women’s Wear Daily to gauge mass style. True fashion lovers are also keenly aware that trends are interpreted differently by all walks of life. There are great websites such as www.thesartorialist.com, you can use to peek into the world of how high fashion is interpreted by people on the street in such fashion hubs as Paris, New York City, London, and Milan.

Best of luck this fashion season and may every trend be a winner.